Maytag Global Company - Implementing Erp

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MIS Quiz 1

Ritesh Verma

Course Name: MIS

Professor: Dr. Pratim Datta

Graduate School of Management

Kent State University

Date: 9/16/2012

Q1. Assume you have been asked to advise on a project rollout for a global company (MNC: Multinational Company) division such as Maytag Refrigerators. Maytag Refrigerators uses its universal brand but conducts all its component sourcing, packaging and labeling from around the globe. Its compressors might come from Thailand, its condenser piping from Brazil, its electronic and thermostat units from Japan and Germany, its panels and plastic components from China. They are assembled in Malaysia and shipped to the US and 20 other global markets. Each market has its own profit center with independent executives that make local market decisions. In light of the global procurement of components and the changing landscape of centralized information but decentralized decision-making, explain how you would advise Maytag Refrigerators on operational best practices using the two concepts we discussed in class. Explain in detail and provide your solutions to the aspects. 1. The costs of “Complex Linkages” and how Maytag should best manage them in a global world of distributed sourcing and manufacturing. 2. The problems of “Taxation without Representation” in instituting centralized information flow while maintaining a profit-center based decentralized decision-making.

Problem Statement:
Maytag Refrigerators is a Multinational company with operations throughout the world. Maytag uses its Universal brand but conducts all its component sourcing, packaging and labeling from around the globe. The parts are shipped from all over the world to be assembled in Malaysia and then shipped to US and 20 other global markets. Each market has its own profit center with Independent executives that make local market decisions. Maytag wants to now implement an ERP system from SAP for a common sourcing and logistics platform to cut down on the procurement costs and inventory and information sharing on an ad-hoc basis.

Current Challenges:
Till date, the various Maytag divisions have been independently working in a “decentralized information and decentralized decision-making” business model. These divisions have been working as Profit centers with independent local executives that make local market decisions. As a result, all of the divisions were doing same activities differently. In order to make all the divisions talk the “same language”, the parent company has decided to implement an ERP system through which all the divisions will share information with each other. However, the ERP system implementation would mean central information but decentralized decision-making. This will pose a lot of potential risks which need to be strategically and patiently mitigated for a successful implementation.

Some of the challenges that Maytag is facing are:
1. With an ERP system, the company is essentially changing the corporate culture – from decentralized to centralized decision making. And that in itself poses a huge uphill challenge on so many levels.

2. Today, the geographically dispersed divisions are free to make their own decisions. With the centralized decision-making, the divisions will lose their autonomy. This might be threatening to the culture of how a division is working today. By taking the decentralized systems away, the company is also taking away the autonomy of the different divisions. And that will be a huge risk to the progress of the company as a whole.

3. Multiple autonomic divisions also mean multiple purchasing systems. Every division has their own vendors and are purchasing on their own. So implementing an enterprise system would not just mean installing a database or data warehouse in place. It is more of a business process reorganization and it can’t be achieved without changing the way business is done.

4. Taxation without...
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